Bockstedt, Kauffman and Riggins (2004)

Source Details

Bockstedt, Kauffman and Riggins (2004)
Title:	The move to artist-led online music distribution: Explaining structural changes in the digital music market
Author(s):	Bockstedt, J., Kauffman, R. J., Riggins, F. J.
Year:	2004
Citation:	Bockstedt, J., Kauffman, R. J., & Riggins, F. J. (2004). The move to artist-led online music distribution: Explaining structural changes in the digital music market. Paper accepted at the 38th Annual Hawaii International Conference on System Sciences.
Link(s):	Definitive , Open Access
Key Related Studies:	Rainie and Madden (2004) Jiang and Sarkar (2003) Clemons et al (2002) Shapiro and Varian (1999) Conner and Rumelt (1991)
Discipline:	D46: Value Theory K: Law and Economics K42: Illegal Behavior and the Enforcement of Law L1: Market Structure; Firm Strategy; and Market Performance O34: Intellectual Property and Intellectual Capital Z1: Cultural Economics • Economic Sociology • Economic Anthropology
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About the Data
Data Description:	The authors explain how each player is affected based on exploratory mini-case evidence. 3 mini-cases are related to artists, 2 to record labels and production companies, 1 to IP protection bodies, 1 to physical retailers, 2 to digital music retailers, and 2 to consumers.
Data Type:	Primary and Secondary data
Secondary Data Sources:	Literature review
Data Collection Methods:	Qualitative Collection Methods Case Study
Data Analysis Methods:	Qualitative Analysis Methods
Industry(ies):	Sound recording and music publishing
Country(ies):	United States
Cross Country Study?:	No
Comparative Study?:	No
Literature review?:	Yes
Government or policy study?:	No
Time Period(s) of Collection:	Non stated
Funder(s):

Abstract

We propose a model for understanding the transformation of the market structure in the recorded music industry value chain due to new forms of digital distribution. The paper takes into account the traditional music industry’s value chain and distribution network, and the product characteristics of digital music as they relate to consumer value creation. We showcase changes in market structure from various perspectives of the players in the music industry value chain. With this as background, we then present propositions that highlight forces at work in market transformation and how each player’s role in the digital music industry value chain is likely to change. We note the new tensions that arise around intellectual property rights for digital music with market structure changes. We support the propositions with illustrative mini-cases.

Main Results of the Study

• With information-based goods such as digital music, software, news and e-books, most of the costs are in the development of the first copy of the good. Once developed, information-based goods can be reproduced and distributed at essentially zero cost. * IP enforcement is crucial to the viability of online information-based goods markets. * The separability of the digital music format allows consumers the option of buying individual songs through digital music retailers. This gives artists incentives to unbundle full-length albums and focus on producing singles for sale* The digital music market structure has implications for strategy and management in the music industry. Power is shifting. Artists, consumers, and digital music retailers are gaining more control.* Digital music sellers make little profit with song sales. Easy transfer and reproduction leave songs vulnerable to piracy, and P2P file sharing has hurt artists and record labels * Though the conceptual model presented in this paper is intended for the music industry, it is applicable to other industries. In particular, the quickly-growing downloadable movie market has similarities. We expect that trends in the movie industry will mimic those in the music industry.

Policy Implications as Stated By Author

• It is crucial for the key players to enforce IP rights restrictions, and promulgate effective copyrights and licensing for digital music distribution. * Digital music’s only distribution channel is the Internet. Players in the music industry should consider opportunities to advertise and attract customers online to this channel, and explore the creation of strategic alliances* Future research may consider the two main pricing strategies for digital music: pay per song download and subscription services.

Coverage of Study

Coverage of Fundamental Issues

Issue	Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

Coverage of Evidence Based Policies

Issue	Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Fair remuneration (levies; copyright contracts)
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Datasets

Sample size:	3
Level of aggregation:	Mini-case
Period of material under study:	Non stated